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The downtrend that began in mid-April pulled down the zinc futures on the Multi Commodity Exchange (MCX) as the price fell from ₹380 to a three-month low of ₹301 on May 13.
The contract rebounded since then and early this week it was hovering around ₹325. Notably, this is a strong resistance level, where the 50-day moving average coincide. A rising trendline, which acted as a support until April end, has now turned into a resistance as the price slipped below this line in early May; this too currently lies at around ₹325. Hence, it would be tough for the bulls to lift the contract above this level with the bearish sentiments.
We expect the contract to align with the broader sell trend which has been in place over the last one month. The contract is forecasted to depreciate to ₹300 in two to three weeks. It can further decline to the support band of ₹286-292 in a couple of months.
Therefore, one can go short at the current level of ₹323 with initial stop-loss at ₹332. When at ₹300, liquidate half of the total shorts and tighten the stop-loss to ₹315. Book the remaining shorts when the price falls to ₹292 as there could be a bounce off the support band of ₹286-292.
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